Question 1

The Federal Open Market Committee consists of all the following people except

Accepted Answer

A) the Board of Governors of the Federal Reserve System. 
B) five presidents of Federal Reserve Banks, on a rotating basis. 
C) the chairman of the President's Council of Economic Advisors. 
D) the President of the Federal Reserve Bank of New York. 
A) the Board of Governors of the Federal Reserve System. 
B) five presidents of Federal Reserve Banks, on a rotating basis. 
C) the chairman of the President's Council of Economic Advisors. 
D) the President of the Federal Reserve Bank of New York.

Question 2

Which of the following variables is likely to serve as an intermediate target for monetary policy?

Accepted Answer

A) Money supply 
B) Inflation rate 
C) Open-market operations 
D) Unemployment rate 
A) Money supply 
B) Inflation rate 
C) Open-market operations 
D) Unemployment rate

Question 3

Fractional reserve banking is the system that

Accepted Answer

A) allows banks not to insure their deposits. 
B) allows banks not to join the Federal Reserve System. 
C) limits banks' activities from crossing state lines. 
D) allows banks to keep smaller reserves than their deposits. 
A) allows banks not to insure their deposits. 
B) allows banks not to join the Federal Reserve System. 
C) limits banks' activities from crossing state lines. 
D) allows banks to keep smaller reserves than their deposits.

Question 4

From 2007 to 2015,the amount of assets owned by the Fed approximately

Accepted Answer

A) doubled. 
B) tripled. 
C) quadrupled. 
D) quintupled. 
A) doubled. 
B) tripled. 
C) quadrupled. 
D) quintupled.

Question 5

If the Fed decreases the monetary base by $100 million and the money multiplier is 4,M1 will

Accepted Answer

A) rise by $400 million. 
B) fall by $400 million. 
C) rise by $25 million. 
D) fall by $25 million. 
A) rise by $400 million. 
B) fall by $400 million. 
C) rise by $25 million. 
D) fall by $25 million.

Question 6

Milton Friedman would eliminate the destabilizing effect of the Federal Reserve's monetary policy by

Accepted Answer

A) eliminating the Federal Reserve. 
B) removing the Federal Reserve's political independence. 
C) requiring that the Federal Reserve choose a monetary aggregate and increase it at a fixed percentage rate each year. 
D) eliminating the Federal Reserve's right to carry out open-market operations. 
A) eliminating the Federal Reserve. 
B) removing the Federal Reserve's political independence. 
C) requiring that the Federal Reserve choose a monetary aggregate and increase it at a fixed percentage rate each year. 
D) eliminating the Federal Reserve's right to carry out open-market operations.

Question 7

Describe,in general terms,the strategy of monetary policy,explaining how monetary-policy tools are used to achieve the goals of monetary policy.What intermediate stages are important in going from tools to goals? What are the links between the different stages? How does the Federal Reserve use this strategy today?

Accepted Answer

The Fed uses its tools to influence inte

Question 8

From 2007 to 2012,the amount of assets owned by the Fed approximately

Accepted Answer

A) doubled. 
B) tripled. 
C) quadrupled. 
D) quintupled. 
A) doubled. 
B) tripled. 
C) quadrupled. 
D) quintupled.

Question 9

The largest liability of the Fed from those on this list is

Accepted Answer

A) U)S. Treasury securities. 
B) mortgage-backed securities. 
C) loans to depository institutions. 
D) currency outstanding. 
A) U)S. Treasury securities. 
B) mortgage-backed securities. 
C) loans to depository institutions. 
D) currency outstanding.

Question 10

The Fed's forward guidance in late 2012 through mid-2015 was framed in terms of keeping interest rates low

Accepted Answer

A) for an extended period. 
B) at least until a particular date in the future. 
C)  based on outcomes for the unemployment rate and inflation rate. 
D) until the next Presidential election. 
A) for an extended period. 
B) at least until a particular date in the future. 
C)  based on outcomes for the unemployment rate and inflation rate. 
D) until the next Presidential election.

Question 11

The Federal Reserve is

Accepted Answer

A) a Kentucky bourbon. 
B) a wild game preserve. 
C) an express mail service. 
D) the central bank of the United States. 
A) a Kentucky bourbon. 
B) a wild game preserve. 
C) an express mail service. 
D) the central bank of the United States.

Question 12

If the money multiplier is 10,the sale of $1 billion of securities by the Fed on the open market causes a

Accepted Answer

A) $10 billion decrease in the money supply. 
B) $1 billion decrease in the money supply. 
C) $1 billion increase in the money supply. 
D) $10 billion increase in the money supply. 
A) $10 billion decrease in the money supply. 
B) $1 billion decrease in the money supply. 
C) $1 billion increase in the money supply. 
D) $10 billion increase in the money supply.

Question 13

Assume that the reserve-deposit ratio is 0.4.The Federal Reserve carries out open-market operations,purchasing $1,000,000 worth of bonds from banks.This action increased the money supply by $1,750,000.What is the reserve-deposit ratio?

Accepted Answer

A) 0)2 
B) 0)3 
C) 0)4 
D) 0)5 
A) 0)2 
B) 0)3 
C) 0)4 
D) 0)5

Question 14

In response to an unanticipated easing of monetary policy,the price level ________ at first,then ________ after a year.

Accepted Answer

A) rises; returns most of the way to its original value 
B) falls; returns most of the way to its original value 
C) remains roughly unchanged; begins to rise 
D) remains roughly unchanged; begins to fall 
A) rises; returns most of the way to its original value 
B) falls; returns most of the way to its original value 
C) remains roughly unchanged; begins to rise 
D) remains roughly unchanged; begins to fall

Question 15

Which of the following might the Fed rely on as an intermediate target?

Accepted Answer

A) The monetary base 
B) The discount rate 
C) M2 
D) The exchange rate of the dollar 
A) The monetary base 
B) The discount rate 
C) M2 
D) The exchange rate of the dollar

Question 16

Which of the following statements would Milton Friedman agree with concerning the conduct of monetary policy?

Accepted Answer

A) Information lags are short, enabling the central bank to respond quickly to changes in the economy. 
B) There is little uncertainty over the effect of a change in the money supply on the economy. 
C) There are long and variable lags between monetary policy actions and their economic results. 
D) Wage and price adjustments are relatively slow, so changing the money supply will have a minimal impact on the real economy. 
A) Information lags are short, enabling the central bank to respond quickly to changes in the economy. 
B) There is little uncertainty over the effect of a change in the money supply on the economy. 
C) There are long and variable lags between monetary policy actions and their economic results. 
D) Wage and price adjustments are relatively slow, so changing the money supply will have a minimal impact on the real economy.

Question 17

Describe,in general terms,the lags in the effects of monetary policy on interest rates,output,and prices.Be sure to note how long it takes each variable to respond to policy changes.

Accepted Answer

Interest rates respond quickly to change

Question 18

Assume that the currency-deposit ratio is 0.3 and the reserve-deposit ratio is 0.2.What is the money multiplier?

Accepted Answer

A) 1)5 
B) 2)0 
C) 2)6 
D) 5)0 
A) 1)5 
B) 2)0 
C) 2)6 
D) 5)0

Question 19

Macroeconomic variables that the Fed cannot control directly but can influence fairly predictably,and which are related to the Fed's goals,are known as

Accepted Answer

A) instruments. 
B) tools. 
C) intermediate targets. 
D) initial targets. 
A) instruments. 
B) tools. 
C) intermediate targets. 
D) initial targets.

Question 20

Which of the following is an instrument of monetary policy?

Accepted Answer

A) The interest rate on three-month Treasury bills 
B) The mortgage interest rate 
C) The discount rate 
D) The budget deficit 
A) The interest rate on three-month Treasury bills 
B) The mortgage interest rate 
C) The discount rate 
D) The budget deficit

The Federal Open Market Committee consists of all the following people except

Which of the following variables is likely to serve as an intermediate target for monetary policy?

Fractional reserve banking is the system that

From 2007 to 2015,the amount of assets owned by the Fed approximately

If the Fed decreases the monetary base by $100 million and the money multiplier is 4,M1 will

Milton Friedman would eliminate the destabilizing effect of the Federal Reserve's monetary policy by

From 2007 to 2012,the amount of assets owned by the Fed approximately

The largest liability of the Fed from those on this list is

The Fed's forward guidance in late 2012 through mid-2015 was framed in terms of keeping interest rates low

The Federal Reserve is

If the money multiplier is 10,the sale of $1 billion of securities by the Fed on the open market causes a

Assume that the reserve-deposit ratio is 0.4.The Federal Reserve carries out open-market operations,purchasing $1,000,000 worth of bonds from banks.This action increased the money supply by $1,750,000.What is the reserve-deposit ratio?

In response to an unanticipated easing of monetary policy,the price level at first,then after a year.

Which of the following might the Fed rely on as an intermediate target?

Which of the following statements would Milton Friedman agree with concerning the conduct of monetary policy?

Describe,in general terms,the lags in the effects of monetary policy on interest rates,output,and prices.Be sure to note how long it takes each variable to respond to policy changes.

Assume that the currency-deposit ratio is 0.3 and the reserve-deposit ratio is 0.2.What is the money multiplier?

Macroeconomic variables that the Fed cannot control directly but can influence fairly predictably,and which are related to the Fed's goals,are known as

Which of the following is an instrument of monetary policy?

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Government Spending and Its Financing

Filters

Exam 14: Monetary Policy and the Federal Reserve System

The Federal Open Market Committee consists of all the following people except

Which of the following variables is likely to serve as an intermediate target for monetary policy?

Fractional reserve banking is the system that

From 2007 to 2015,the amount of assets owned by the Fed approximately

If the Fed decreases the monetary base by $100 million and the money multiplier is 4,M1 will

Milton Friedman would eliminate the destabilizing effect of the Federal Reserve's monetary policy by

From 2007 to 2012,the amount of assets owned by the Fed approximately

The largest liability of the Fed from those on this list is

The Fed's forward guidance in late 2012 through mid-2015 was framed in terms of keeping interest rates low

The Federal Reserve is

If the money multiplier is 10,the sale of $1 billion of securities by the Fed on the open market causes a

Assume that the reserve-deposit ratio is 0.4.The Federal Reserve carries out open-market operations,purchasing $1,000,000 worth of bonds from banks.This action increased the money supply by $1,750,000.What is the reserve-deposit ratio?

In response to an unanticipated easing of monetary policy,the price level ________ at first,then ________ after a year.

Which of the following might the Fed rely on as an intermediate target?

Which of the following statements would Milton Friedman agree with concerning the conduct of monetary policy?

Describe,in general terms,the lags in the effects of monetary policy on interest rates,output,and prices.Be sure to note how long it takes each variable to respond to policy changes.

Assume that the currency-deposit ratio is 0.3 and the reserve-deposit ratio is 0.2.What is the money multiplier?

Macroeconomic variables that the Fed cannot control directly but can influence fairly predictably,and which are related to the Fed's goals,are known as

Which of the following is an instrument of monetary policy?

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Government Spending and Its Financing

Filters

In response to an unanticipated easing of monetary policy,the price level at first,then after a year.